Cyprus still can become a bankrupt

15.07.2013

According to the research of the rating agency Moody, the possibility that the Republic of Cyprus will become a bankrupt remains high. This conclusion of agency is based on significant economic risks for the economic indicators of Cyprus.

Economic risks for the Republic of Cyprus are primarily due to the instability of the state budget. Also, as the Moody mentioned, Cyprus observed weak economic trends, followed by limited funds and convincing predictions. Such situation on Cyprus will in the long term have negative impact on attracting investors and businessmen.

The rating agency notes that bankruptcy is not the only possible scenario for Cyprus, another possible scenario for country is to get out of the European Union. However, it is noticed, that by 2016 Cyprus should return to positive economic indicators. At this point, the rating of Cyprus is Saa3 (rating outlook - negative).

Based on:

http://www.moodys.com

Expert’s opinion

Today, the credibility of the Cyprus is over. We can make the prediction that in the following years situation in the banking sector of Cyprus would not stabilized: businessmen would only withdraw their money, not vice versa. This is understandable, because the trust to Cyprus banks is over, and in the case of carrying about money, especially when you choosing the bank for them, trust playing important role. So, financially this situation hurts economy of Cyprus.

However, this situation wouldn`t take any influence on the registration of companies on Cyprus. Low taxation, the wide amount of agreements about avoiding double taxation, the lack of tax at source in the derivation of dividends – here are the pluses of Cyprus that it has been always famous for. So, you should take advantage of those pluses. Cyprus is convenient and comfortable to maintain business among the other members of the European Union.

Let's hope that the situation will normalize and stabilize, and Cyprus will be able to regain it`s former glory!

Irina Lomakina ( Director of Moscow office of “Honest&Bright” Company)